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What does liquor privatization mean for PA?

One part of Governor Tom Corbett’s budget proposal is privatizing the state’s liquor system. In the plan he is proposing the sale of more 1,200 different wine and spirit licenses. Governor Corbett hopes the bill is quickly approved. “It’s likely that it will work it’s way through the House of Representatives and then head over to the State Senate for their consideration,” said Lt. Governor Jim Cawley. “In pretty short order, because it’s the Governor’s desire that we conclude all this on or before June 30th, which is the date that we are constitutionally required to pass the budget as well.”

If passed, the legislation would immediately go into effect. “July first or whenever the legislation goes into effect, what you will see right away, is going into a restaurant that currently has a liquor license you’ll be able to enjoy a bottle of wine in that restaurant, and if you want to purchase another one to take home , you’ll now be able to do that,” said Cawley. “What you will see over time is the gradual introduction of beer and wine in grocery stores and in pharmacies, and beer in convenience stores and in larger box stores you will see beer and wine. We’ll be working through that whole process both with the private sector and with the LCB to make it as soon as possible. It depends on how quickly it is passed and how quickly stores move toward an application, and the applications are granted. So obviously it would be over a series of several months.”

The legislation would allow an unlimited number of grocery stores and pharmacies to sell beer and wine. An unlimited number of convenience stores will be able to sell beer. Box stores and beer distributors will be able to sell beer and wine, and if they successfully acquire a license, they will be able to sell spirits as well.

Another change includes case rules. “What you will see is the ability of four six packs of four different brands of beer, this is currently something the beer distributors are not allowed to do. You’ll be able to do that to make up your own cases,” said Cawley.

Under the plan thousands of state workers will likely lose their jobs. “For 5,000 people who work at the PLCB, 3,500 of them are members of the United Food & Commercial Workers, it will mean the loss of their jobs,” said John Meyerson, director of legislation and political action for United Food & Commercial Workers Local 1776. He says the plan will cost people their jobs and more. “Right now Pennsylvania has the lowest rate of alcohol morbidity in the country. We think that the system we have now is keeping Pennsylvania safer. The governor’s plan will increase outlets you know, tenfold.”

Meyerson says the state can provide more convenience, “We would like to see more Pennsylvania wine and spirit shops inside supermarkets, next to beer distributors, in communities where they have BYOB restaurants.”

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9 Comments to “What does liquor privatization mean for PA?”

    ricky cromer said:
    February 12, 2013 at 7:06 PM

    ill be glad when you make the change itll make things so much easier just like the south

    Albert Brooks said:
    February 12, 2013 at 8:38 PM

    Something that can't come soon enough. The union has been spreading BS about this unchecked for a while now.. First, there aren't 5000 people who work at the PLCB. 34% who do are part time. A fair number aren't union members at all they are forced to pay dues as part of being hired. The union calls it "fair share" and the employess have other names for it. Since the PLCB will still exist to license and regulate the stores they will need a few more people for that. PA is not near the top of any area in alcohol control. We have more binge drinking (#7 in the US) . more under age binge drinking, more DUI then most border states and contrary to what Mr. Meyerson says we rate higher in Alcohol Related Disease Impact and Years of Potential Life Lost then 5 of 6 border states.(according to the CDC) Clearly the system in place is nowhere near as good as they claim.

      Bill said:
      April 7, 2013 at 2:20 PM

      Mr. Brooks has his facts wrong. PA has the seventh lowest rate of binge drinking among high school students in the U.S. — and it's no accident. It's because we don't have booze stores on every corner. And we sure don't need them.

        Albert Brooks said:
        April 8, 2013 at 9:52 AM

        There is a difference between the subset of high school students (14-18 years old)and the entire set of underage (12-21 years old). My above statement is correct as we compare to border states as is yours.

    M. R. Birkos said:
    February 13, 2013 at 11:17 AM

    The $500 million annual tax revenue would, more or less, remain whether in state or private hands. There is some debate on how the state would replace the $103 million in annual net profit afforded by the LCB. Not much is said of the other $100 million given annually to private landlords, the state police, or various scholarship funds. But what is not even remotely guaranteed is the $1 billion windfall projected by the governor. Not even Sheetz is keen on paying the exorbitant license fees.

    Here are the last four states that privatized elements of their liquor sales.

    Iowa went private with retail operations of wine in 1985, and liquor in 1987.

    West Virginia privatized liquor retail operations in 1991.

    Both states earned less than $20 million each. Operational costs were greatly reduced, but the expected windfalls never materialized.

    In 1986, Iowa earned $71.6 million. In 1987 – $43.6 million. Sales tax revenue did not return to pre-privatization levels until 2004. They chose to retain wholesale operations, because they would have lost $60-70 million/year.
    http://www.pennlive.com/editorials/index.ssf/2010
    http://voices.washingtonpost.com/virginiapolitics

    In 2004, Maine earned $125 million for a 10 year lease of their wholesale operations, but since, has lost over $100 million due to revenue sharing with the wholesale distributor.
    http://www.mainebiz.biz/article/20110725/CURRENTE

    In 2011, we know that Washington’s liquor sales contributed $461 million to their general fund, roughly equal to our PLCB. When they privatized in 2012, we know that Washington only earned $150 million for wholesale rights, $30.8 million for their existing stores, and a new liquor/wine/beer license fee is only $166.00. They exploded from 300 to over 1,400 retail outlets, many open until 2:00 AM. Unit sales only increased by 8%.

    Since 2011, the governor’s windfall estimate has been $1.6 billion. Today it is $1.0 billion. Ironically, the governor’s billion dollar number and the real market comparables are both deal killers.

      LewBryson said:
      February 13, 2013 at 2:02 PM

      Yeah, well…a LOT of us don’t care how much the “windfall” is. There’s going to be one, size is just something to argue over, and NO ONE really knows. The important thing is allowing Pennsylvanians to enter the 21st century like most of the rest of the country. Privatization IS modernization, and we don’t have to rely on the creators of the “wine kiosk” to do it. Really? Would you want to entrust “modernization” to the people who came up with that piece of kludge?

    R M Patterson said:
    February 26, 2013 at 3:44 PM

    As a manager of a small, single location, family owned beer distributor, I really do welcome some of these changes. It's about time PA came out from under prohibition era laws. However (and this hasn't been set in stone), they amount of money the state is planning on asking for "new", or in our case "enhanced" liquor licenses, is way off. Currently, the rumored cost for the average mini-mart or Costco (etc.) to sell beer is $17,500-35,000. The cost for an already licensed establishment like ours to get "enhanced"? $150,000, plus a sizable yearly renewal fee ($10k). It's like they want to put the case distributors out of business, so the small stores can have the revenue.

      Albert Brooks said:
      February 26, 2013 at 4:55 PM

      Absolutely $150K is too much even with getting to sell wine and liquor. They shouldn't give it away but they should price people totally out of the market either. Beer distributors have some political power so it might be wise to use it to come up with some kind of compromise. Change is coming and you will have to adapt in someway to it..

    Albert Brooks said:
    February 26, 2013 at 4:56 PM

    Opps, I wanted to say "they should not price people totally out of the market either"

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